Tag Archives: Goldman Sachs

Scary thought for consultants: are crises overblown?

There’s quite a group of people like me who make a living, or try to, by telling CEO-types that “they better prepare” because “now is too late.” The underlying and compelling reason is that a major crisis is a big deal, maybe even life or death for the corporation. But, this Wall Street Journal article poses an interesting and potentially disturbing question: are these new kind of social media-driven crises not really such a big deal? Do they really have any lasting impact on the share price, bottom-line an organization future?

The article traces the story of three recent reputation crises which would fit in the category of serious. But, it shows that the impact of these events was very short-lived and with little to no apparent damage to brand value, share price or profits. One of the organizations highlighted is Goldman Sachs which has become a favorite whipping boy of the media in the last while with little apparent impact on the company’s future or performance.

The writer of the article also asks a number of PR professionals what they think of these short-lived events. “Puzzled by such sanguine attitudes, I asked PR experts for an explanation. Their answers can be grouped in three categories: “the shiny object,” “the loyalty issue” and “the lack of choice.””

Personally, I have felt for some time that the recent changes mean several things:

– much increased vulnerability because of how the digital lynch mob can operate (thanks Geoff for that descriptive term)
– much faster response required because of the light speed of the hyper-networked
– much faster cycle from germination, to full bloom, to the leaves dropping harmlessly
– potentially lower impact because of the sheer volume of these (see increased vulnerability) and the weariness and loss of attention span caused by the volume and frequency.

There are other important factors highlighted by the PR pros. One is loyalty, the other is the growing realization that the digital lynch mob is not the whole world (see my post on Komen Foundation where I think most PR analysts completely missed this point). But the biggest difference to me is engagement. Pre-engagement with key stakeholders. This is becoming my new mantra but I think it is critical. If you talk to the people who matter, and a lot of them at that, on an on-going basis, then when it hits the fan, you can just keep talking. You either say: we screwed up and we’re sorry and we’re fixing it, or the lynch mob has it wrong and here’s why, or the media’s not telling the truth and here’s why.

This ability to just step up and on-going conversation is one big reason why I think a lot of the flutter than happens on the Internet and media with these kinds of issues just won’t be such a big deal. But, if your only way of talking to the people who really matter is through the media by pushing out a press release or two, hang on for a longer and much bumpier ride.

A Post Script re Pink Slime.

The pink slime crisis sort of gives lie to the above issue of crises not having such a great impact. BPI certainly wouldn’t say that as it fights for its life. Another producer of the beef product, just filed for bankruptcy.

Goldman PR crisis–Round 27

Does it seem to you that Goldman Sachs has sort of an unending PR crisis? The latest involves a London-based executive, Greg Smith, who quit the company rather publicly by having his resignation letter published as an op-ed in the New York Times. That strikes me a little odd–does NYT publish resignation letters from disgruntled employees routinely or was this some sort of special case? I’m guessing the news potential was too great to pass up.

The news nose knows it, and the letter and op-ed went viral, as they say. Why? This article suggests some reasons. I’m thinking it has a lot to do with the general distaste left in the mouth of most relating to fat cat Wall Street bankers, plus the continuing PR disasters that seem to haunt this once highly respected firm. How have the mighty fallen.

Given that, I think PR Daily News missed a key point in their otherwise valuable reflection on this latest crisis and what it means for crisis managers. They report that Goldman’s response to this latest hit was to say “we disagree.” Here’s the quote:

“We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”

Now, that is cautious, reasonable and I’m sure reflects the view of management. Unfortunately it does little to help Goldman’s increasingly severe reputation crisis. I believe it is one of the key functions of communication managers in an organization to deeply understand and represent the viewpoint of those outside the organization–particularly those who matter most to the future of the organization. If that is the case and a dose of reality were injected into the discussion about how to respond to the unhappy, loudmouth ex-employee I would have said: “You know we think this guy is out to lunch and clearly wants to hurt us. But, we’ve been hit by many accusations including some that proved to be fairly well established as fact. We need to approach this with uncustomary humility. We need to show that we are clearly examining ourselves to see how we match up with the values and expectations of our customers, potential customers, and stakeholders. Therefore, I suggest we issue as statement such as: ‘Mr. Smith’s accusations are hard-hitting and painful, particularly at a time when we are carefully reassessing the true values of Goldman Sachs. While we believe he is fundamentally wrong on some of the key issues, particularly that we don’t care about our customers, we are taking this criticism to heart. It is valuable, if painful, input that deserves our attention and we will use it to continue the soul searching that is necessary for us at Goldman Sachs as we look to a healthier, more respectful future.'”

OK, maybe I’m the one out to lunch. What do the rest of you think? Did Goldman’s flat rejection help them in their increasingly tenuous reputation management challenges?



What the… Goldman outlaws bad language?

Gosh darn I hope this is a trend. DailyDog reports that Goldman Sachs is banning bad language from internal emails. I’ve been talking about “toxic talk” for some time now and believe that the cursing, swearing, foul language combined with the vitriol and hyper-partisanship that characterizes so much of social media and blogs is damaging. Damaging to the people who participate, damaging to the ones they intend to damage, but most of all damage to the soul of our communities and society. I’m glad Goldman is taking this position and I hope it is not merely, as DailyDog suggests, part of their effort to clean up their image. It’s not that I would be dismissive of this step in helping clean up their image. I would rather it be done because it is a healthy, right thing to do.

Reminds me of a research project I did years ago for the construction industry. In much better construction times than these they were faced with a severe shortage of young people entering the field. This despite paying probably the highest starting wages of any industry. So I did some research among high school students as to their interest in construction as a career. I found that the biggest obstacle to considering the industry was their perception of the people in the industry. Who wants to invest their lives with people they find disgusting. They referred to the leering and catcalls directed at young women from construction crews. They referred to the filthy, unkempt appearance. And they referred to the bad language. My recommendation was to train workers to treat the public with respect, train them to treat each other with respect, wear uniforms and improve physical appearance, and ban swearing. This advice went over about as well as a toad in a punchbowl. Oh, I also advised they do some PR and advertising showing some of the outstanding young men and women who were happily making construction a career–that part they liked.

Some no doubt are attracted to the profane, testosterone environment of the trading floor. But, our world is changing. We’re tired of the kind of free for all environment, greed and excesses that are at the heart of the financial mess we are in. Cleaning up the language isn’t going to change the world. But, like continually scrubbing graphiti off the subways in NYC, it just may be the tipping point to begin removing some of the toxicity of our discourse and society. I hope there are many others who follow Goldman’s example.

Goldman Sachs–what to do when in a deep hole

Thought it might be interesting to comment on the efforts of Goldman Sachs to dig out of their deep hole, while about to visit the command center for the spill in New Orleans.

Daily Dog says that Goldman is about to start a PR campaign and maybe even go on Oprah to help communicate what banks do.

One thing for certain, when you are in a deep hole you can be assured that every tiny effort to improve your status will be observed, reported, and attacked. Usually with exceptional venom. I’ve seen Daily Dog do that with regard to BP and the spill but they are not alone. Not sure why some PR publications seem to want to outdo the outrage. By the time such reporting hits the blogs and social media, the effort has been so twisted and trashed that it is hardly recognizable. Just a warning to you, Goldman.

On a tv program I was on with Peter Firestein, a crisis communication consultant with a book with the best title around: Crisis of Character, he said BP should just be quiet. I disagreed but have thought about it alot. Everything that is said is attacked, discredited, and in most cases, turned against them. Same may be true (to a lesser degree I would suggest) of Goldman. Should they just be quiet?

A few key principles I believe in and have promoted in my book and presentations:

1) Credibility is everything. You cannot exist in the public arena, in the marketplace, in the stock market, without it. But what if you completely and unutterably lose it? You must borrow it from those who have it. That is what I have suggested before. Goldman needs friends now, and it is not the only one. Friends trusted by many of its worst critics. Hard to do? Maybe, particularly as deep as some of these holes are, but absolutely necessary. Credibility must be restored and it is likely that few within Goldman will have the credibility needed to do the job, or can earn it by a PR campaign or a trip to the holy shrine of Oprah.

2) Don’t let lies stand. In the current situation I am observing and somewhat involved, I have seen countless lies propagated, many by the most mainstream of the mainstream. I call them lies but sometimes it is sloppy or ignorant reporting, sometimes especially vicious twists on the truth, sometimes repeats with added flavor of misinformation reported elsewhere. Many times the lies are not untrue, they just are presented in a way that does not represent reality. But I see little effort on Goldman’s part to counter what they may consider lies. A lie repeated often enough becomes the truth. They cannot be allowed to stand unchallenged. But, if you are the one without credibility or with it seriously damaged as in Goldman’s case, you are probably not the best one to challenge the lies. Someone, or some organization, with credibility must be found.

Short of those kinds of game changing, aggressive actions, perhaps it is best to just be silent.

Reputation crises and political impact–Goldman and offshore drilling

There is almost always a link between major reputation crises and politics as I’ve written about in Now Is Too Late. It certainly was true in the first really major disaster I was involved in, the Olympic Pipeline explosion, and it certainly is of two major crises events going on right now: Goldman Sachs and the Deepwater Horizon drilling rig event. Goldman’s problems will influence significantly the very important national debate on financial oversight. The Deepwater Horizon event will influence the debate on energy independence and expansion of offshore drilling.

Which means, of course, that the crisis managers involved in working these two humongous issues right now, will have a very significant impact on the long term decisions that elected officials will make in these two arenas. We talk about the importance of Supreme Court nominations because they will affect big decisions for years. Have we ever thought about executive and communication leadership in that way, thinking about how well they do their jobs may influence public policy on issues as important as what are the constraints government should put on greed, and how aggressively should we pursue energy independence?

A few thoughts on Goldman Sachs. Would they be aggressively pursued by the SEC if they had not had the gall to be so stinking successful in an economy and political environment that suddenly sees huge profits and executive payouts as a form of treason? I don’t want to downplay any illegal activity and it sounds like they may very well have done some things quite wrong–particularly related to providing disclosures to investors. That is serious stuff and if guilty I hope they receive the full measure of the law. But the Economist headline was right: Greedy until Proven Guilty. Greed is out. Frugalness and self-sacrifice when it comes to earnings is in. Part of this is because we love those who work hard, try to get to the top against insurmountable obstacles, but no sooner do they stand on the mountaintop alone and we start throwing stones, eagerly awaiting their fall. (I’ve blogged on this about Toyota long before they fell from the mountaintop.) Goldman’s problems with public opinion and reputation emerged well before the SEC investigation. They may go the way of Arthur Andersen who died not because of legal problems (which they won) but because they became so tainted in the public’s eyes that the stink attached to them infected anyone they did business with. It was the loss of customers that killed them. Goldman faces very much the same risk. If they don’t aggressively remove the stink, no one concerned about their reputation will want to get too close.

Stories are emerging now about BP’s reputation as it relates to the Deepwater Horizon event. (Full disclosure, BP is a client) Whether that is fair or not will be for the media and the public to decide. BP leased the drilling rig and is working exceptionally hard, as a member of the Joint Information Center for the response, to communicate aggressively, quickly and effectively. But, BP’s reputation, the reputation of the oil industry, the sentiment of people impacted by this event and the environmental damage will all factor into the discussion to come about the risks and benefits of deepwater drilling. Obama has announced his support for expansion. That support may be at risk if the outcry rises about this event. That’s why what those people involved in the response and the communication about the response are doing is so important. It’s also why it is important that the entire industry be involved in open, honest, rational debate about this event and its results. The tendency of the industry is to duck and hide and say, well, we produce oil and whether people like us or not they keep buying it. There are those in the industry who point to Exxon and say despite the reputation hit they took, they continue to be one of the most profitable, respected, investor-preferred companies around. No question that ExxonMobil is exceptionally well run. But there is no question that the reputation hit they took continues to cast a pall over the company and the industry. The cost to all of us as consumers of fuel products is much higher directly as a result of the careless attitude Exxon exhibited during the event and in the years following it. Higher because of regulation, because of lack of public support for anything perceived as favoring the industry, and because the industry continues to be a favored target (certainly in Washington State) for punitive taxes. All those add to energy costs which you and I pay. So I get angry with the industry communicators who say, see, it didn’t matter that Exxon’s reputation got hurt. Wrong.

I hope if you are an organization leader or a person charged with crisis management and communication responsibility, you will think about the link between reputation crises and politics. Because what you do to build or destroy trust will likely impact all of us. You have a heavy responsibility.